6 ms·

I still can't believe how Elizabeth Holmes got away with just a slap in the wrist. Is it because the board was full of connected people? Or because it's a succe

by alecco 9y ago

I still can't believe how Elizabeth Holmes got away with just a slap in the wrist. Is it because the board was full of connected people? Or because it's a successful woman CEO story? Either way, it's a disgrace. Sociopaths will pick this signal as a boost of confidence.

blhack 9y ago
Does anybody have a guess as to how many people died as a result of this scam? (And is it an episode of black mirror that I'm even on this train of thought?)
- samstave 9y ago
  Please ELI5 what the scam was? I know they did Bad Things TM, but I don't know what exactly took place.
  - scarmig 9y ago
    They sold medical diagnostics that did nothing. They did this knowing that they did nothing. In a way, it's worse than the ads on the internet promising to cure cancer with nettles and probiotics and yoga. Online ad scammers can plead ignorance that what they sell isn't actually useful, and I'm sure there're legal disclaimers in fine print saying the products are sold purely for entertainment. Theranos, on the other hand...
  - astura 9y ago
    They sold a new type of blood test. Turns out the company was making false claims about their blood tests so the entire company ended up being one big sham.
  - rdtsc 9y ago
    It's a blood testing company that has been shady about its methodology and results. Does is really take an ELI5 to see how it could end being harmful to people.
  - Obi_Juan_Kenobi 9y ago
    IIRC, the securities fraud is based on them claiming to perform tests that were actually performed on standard blood test equipment made by Seimens, as well as claiming to perform more diagnostics than they actually could. The whistleblowing is based on the data 'grooming' that their machines did, which made it look like the machines were more accurate than they actually were. Tyler Shultz brought up his concerns and was rebuked, and then went to the WSJ. The basic idea is that their machines didn't actually work.
ABeeSea 9y ago
The DoJ can still bring charges. Settling with the SEC doesn’t shield her from legal action.
fragsworth 9y ago
No question this Theranos situation would have inspired a whole new wave of startup con artistry, but I think all those people are currently peddling shitcoins. When the shitcoin bubble completely falls apart (a process which it may be going through right now), we might see a bunch of Theranoses popping up.
- dkersten 9y ago
  > a process which it may be going through right now Eh, I dunno. I'm not a big cryptocurrency fan, but that doesn't really sound like the current reality. It may have lost a lot of its December peak value, but the value of cryptocurrencies is still about where it was in November and has been stable there for a month or two. That's still a lot higher than the first ten months of 2017 (and previous years), so "completely falls apart" seems a bit strong.
  - fragsworth 9y ago
    You've mistaken what I mean when I say "shitcoin bubble". I'm talking about the thousands of ICOs that are utter garbage. At some point that has to fall apart. Eventually you burn enough people and there's nobody left to scam, or governments step in to regulate it. There's a reason you don't see stock peddling scams anymore.
    - dkersten 9y ago
      Ah, ok, fair enough. It seems that I did misunderstand. Thanks for clarifying.
  - Obi_Juan_Kenobi 9y ago
    There's a big difference between the 'regular' crypto market (btc ltc eth) and the shitcoin/ICO market. Watching 'dominance' of the various coins is an informative indicator (IMO) of the overall health of the system. https://coinmarketcap.com/charts/ https://coinmarketcap.com/charts/ (3rd chart down) Obviously market cap is an extremely fraught metric for coins (trade one token for $1.00, with a supply of trillions, and it's 'worth' trillions), but it should average out somewhat. Bitcoin is recovering a bit of dominance (which I think is a good sign), but that growing 'other' portion suggests that there's a lot of garbage, and that's only growing. So I agree with you; the crypto space is taking on more dubious value, more shitcoins, etc.
cortesoft 9y ago
It is because the punishment for this sort of thing is ALWAYS a slap on the wrist.
- tenpies 9y ago
  Disagree, see: Martin Shkreli.
  - pm90 9y ago
    He was an outlier by a huge huge margin. Specifically, what got him in trouble is probably his public persona as much as his actual crimes. Plus... he was stupid enough to violate the terms of his probation and got thrown into jail. I don't think most executives are anywhere as stupid.
    - lulmerchant 9y ago
      You might argue that what kept Elizabeth Holmes out of trouble was her public persona as well. Neither case has the aroma of justice as far as I'm concerned.
  - ClassyJacket 9y ago
    Didn't he go to jail for trying to get someone to cut Hilary Clinton's hair?
    - mjcl 9y ago
      His bail was revoked for offering $5000 for her hair with the follicle attached, but he had already been found guilty and was awaiting sentencing. It was a last straw, not a sole offense.
  - icedchai 9y ago
    Shkreli was obnoxious and disrespectful. If he was polite and considerate, he would've gotten the slap on the wrist, guaranteed.
  - 9y ago
txsh 9y ago
Anything less than life in prison is a miscarriage of justice. She’s a murderer.
rm999 9y ago
>Is it because the board was full of connected people? The board was scammed by her and lost billions of potential dollars, so that's probably not why. If anything, I wonder the opposite, why the connected people didn't do more; I'm guessing it's because destroying her further isn't worth their time?
- neaden 9y ago
  People are frequently very averse to admitting they've been scammed, especially people with a reputation to protect.
- avs733 9y ago
  >The board was scammed by her and lost billions of potential dollars I think it is fair to summarize the literal job, and legal responsibility, of the board as don't get scammed They aren't ma and pa kettle...
  - adwf 9y ago
    True, but nonetheless, fraud is fraud. Even rich board members get scammed sometimes. Fraud laws protect people from scams after the fact.
rpmcmurphy 9y ago
But she wears a black turtleneck, just like Steve Jobs.
aphextron 9y ago
It absolutely blows my mind how she avoided jail time over this. If I had called someone on the phone and scammed their credit card for $1,000, I'd be looking at 3-5 years in Federal prison. There truly are zero consequences in life beyond a certain level of net worth.
- nur0n 9y ago
  Not sure I follow; I'm pretty sure her net worth is obliterated by now
  - BayesStreet 9y ago
    She never earned that worth in the first place, it was effectively a zero risk bet for her with non-zero damages to others. This sort of thing should not be allowed to happen.
    - exolymph 9y ago
      She risked her reputation, which is now destroyed (deservedly).
- red_phone 9y ago
  She settled the SEC’s civil case against her but the article indicates she remains under a separate criminal investigation.

by alecco 9y ago

blhack 9y ago

Does anybody have a guess as to how many people died as a result of this scam? (And is it an episode of black mirror that I'm even on this train of thought?)

samstave 9y ago
Please ELI5 what the scam was? I know they did Bad Things TM, but I don't know what exactly took place.
- scarmig 9y ago
  They sold medical diagnostics that did nothing. They did this knowing that they did nothing. In a way, it's worse than the ads on the internet promising to cure cancer with nettles and probiotics and yoga. Online ad scammers can plead ignorance that what they sell isn't actually useful, and I'm sure there're legal disclaimers in fine print saying the products are sold purely for entertainment. Theranos, on the other hand...
- astura 9y ago
  They sold a new type of blood test. Turns out the company was making false claims about their blood tests so the entire company ended up being one big sham.
- rdtsc 9y ago
  It's a blood testing company that has been shady about its methodology and results. Does is really take an ELI5 to see how it could end being harmful to people.
- Obi_Juan_Kenobi 9y ago
  IIRC, the securities fraud is based on them claiming to perform tests that were actually performed on standard blood test equipment made by Seimens, as well as claiming to perform more diagnostics than they actually could. The whistleblowing is based on the data 'grooming' that their machines did, which made it look like the machines were more accurate than they actually were. Tyler Shultz brought up his concerns and was rebuked, and then went to the WSJ. The basic idea is that their machines didn't actually work.

ABeeSea 9y ago

The DoJ can still bring charges. Settling with the SEC doesn’t shield her from legal action.

fragsworth 9y ago

No question this Theranos situation would have inspired a whole new wave of startup con artistry, but I think all those people are currently peddling shitcoins. When the shitcoin bubble completely falls apart (a process which it may be going through right now), we might see a bunch of Theranoses popping up.

dkersten 9y ago
> a process which it may be going through right now Eh, I dunno. I'm not a big cryptocurrency fan, but that doesn't really sound like the current reality. It may have lost a lot of its December peak value, but the value of cryptocurrencies is still about where it was in November and has been stable there for a month or two. That's still a lot higher than the first ten months of 2017 (and previous years), so "completely falls apart" seems a bit strong.
- fragsworth 9y ago
  You've mistaken what I mean when I say "shitcoin bubble". I'm talking about the thousands of ICOs that are utter garbage. At some point that has to fall apart. Eventually you burn enough people and there's nobody left to scam, or governments step in to regulate it. There's a reason you don't see stock peddling scams anymore.
  - dkersten 9y ago
    Ah, ok, fair enough. It seems that I did misunderstand. Thanks for clarifying.
- Obi_Juan_Kenobi 9y ago
  There's a big difference between the 'regular' crypto market (btc ltc eth) and the shitcoin/ICO market. Watching 'dominance' of the various coins is an informative indicator (IMO) of the overall health of the system. https://coinmarketcap.com/charts/ https://coinmarketcap.com/charts/ (3rd chart down) Obviously market cap is an extremely fraught metric for coins (trade one token for $1.00, with a supply of trillions, and it's 'worth' trillions), but it should average out somewhat. Bitcoin is recovering a bit of dominance (which I think is a good sign), but that growing 'other' portion suggests that there's a lot of garbage, and that's only growing. So I agree with you; the crypto space is taking on more dubious value, more shitcoins, etc.

cortesoft 9y ago

It is because the punishment for this sort of thing is ALWAYS a slap on the wrist.

tenpies 9y ago
Disagree, see: Martin Shkreli.
- pm90 9y ago
  He was an outlier by a huge huge margin. Specifically, what got him in trouble is probably his public persona as much as his actual crimes. Plus... he was stupid enough to violate the terms of his probation and got thrown into jail. I don't think most executives are anywhere as stupid.
  - lulmerchant 9y ago
    You might argue that what kept Elizabeth Holmes out of trouble was her public persona as well. Neither case has the aroma of justice as far as I'm concerned.
- ClassyJacket 9y ago
  Didn't he go to jail for trying to get someone to cut Hilary Clinton's hair?
  - mjcl 9y ago
    His bail was revoked for offering $5000 for her hair with the follicle attached, but he had already been found guilty and was awaiting sentencing. It was a last straw, not a sole offense.
- icedchai 9y ago
  Shkreli was obnoxious and disrespectful. If he was polite and considerate, he would've gotten the slap on the wrist, guaranteed.
- 9y ago

txsh 9y ago

Anything less than life in prison is a miscarriage of justice. She’s a murderer.

rm999 9y ago

>Is it because the board was full of connected people? The board was scammed by her and lost billions of potential dollars, so that's probably not why. If anything, I wonder the opposite, why the connected people didn't do more; I'm guessing it's because destroying her further isn't worth their time?

neaden 9y ago
People are frequently very averse to admitting they've been scammed, especially people with a reputation to protect.
avs733 9y ago
>The board was scammed by her and lost billions of potential dollars I think it is fair to summarize the literal job, and legal responsibility, of the board as don't get scammed They aren't ma and pa kettle...
- adwf 9y ago
  True, but nonetheless, fraud is fraud. Even rich board members get scammed sometimes. Fraud laws protect people from scams after the fact.

rpmcmurphy 9y ago

But she wears a black turtleneck, just like Steve Jobs.

aphextron 9y ago

It absolutely blows my mind how she avoided jail time over this. If I had called someone on the phone and scammed their credit card for $1,000, I'd be looking at 3-5 years in Federal prison. There truly are zero consequences in life beyond a certain level of net worth.

nur0n 9y ago
Not sure I follow; I'm pretty sure her net worth is obliterated by now
- BayesStreet 9y ago
  She never earned that worth in the first place, it was effectively a zero risk bet for her with non-zero damages to others. This sort of thing should not be allowed to happen.
  - exolymph 9y ago
    She risked her reputation, which is now destroyed (deservedly).
red_phone 9y ago
She settled the SEC’s civil case against her but the article indicates she remains under a separate criminal investigation.